R&R Insurance Blog

When is the right time to start investing in your long term care insurance?  Time is money when it comes to long term care insurance premiums.  The younger you are when you purchase your policy, the less you will pay in premiums over the course of a lifetime, because of the yearly premium being much lower the younger you are.

Learn why purchasing long term care insurance while you are in your 40s or 50s makes good financial sense in this short video...

Long Term Care Calculators at Smart Money!

For more information about long term care, contact knowledgebroker Jane Shevey.

In my constant effort to keep on top of all the current statistics regarding our aging population and how long term care insurance can benefit them, I came across this interesting study done by MetLife. Here is the synopsis, again all credit for information goes to MetLife:

Since 2007, the MetLife Mature Market Institute (MMI) has conducted a series of studies to better understand the Baby Boomer cohort — the population born 1946–1964. The MMI study, Boomers in the Middle, examines those of the Baby Boomer cohort born 1952–1958, and who will be 52–58 years old in 2010. Building on the MMI’s Boomers: Ready to Launch and Boomer Bookends studies, which examined the Oldest Boomers born in 1946 and Youngest Boomers born in 1964, this national survey establishes baseline data on Middle Boomers in financial, family, social, and retirement planning aspects of their lives.

• More than half of Middle Boomers still have children living at home, and about half have grandchildren. Two-thirds have at least one parent still alive, making them a good example of the proverbial “sandwich generation.”
• More than 60% of the Middle Boomers are working full-time with 68% of men and 53% of women in this category. Another 8% are working part-time, 6% are self-employed, and 5% are looking for work. An additional 7% are on disability, and 8% are fully retired.
• Most Middle Boomers describe themselves as being in good health, but at the same time are concerned about being able to afford health care costs in the future.
• Middle Boomers would like to retire at age 65 but do not think they will be able to do so until age 66, not a great difference in view of the economic turbulence they have experienced. Their plans to do so have not changed in the last two years despite economic challenges. They expect the largest portion of their retirement income (42%) to come from Social Security benefits, with another third from 401(k) and defined contribution plans.
• Middle Boomers on average plan to take their Social Security benefits at age 65, well before they are eligible for full benefits, between ages 66 and 66 and 10 months. About one in five plan to apply for benefits as early as age 62. Almost one-quarter anticipate applying for benefits at a later date than they had originally planned; 69% have not changed their plans, and 6% are planning on an earlier than planned application.
• The vast majority are homeowners (86%) with an average home value of $272,600. Fifteen percent would consider using a reverse mortgage for retirement income funding.
• More than half of the Middle Boomers feel that they are behind in their retirement savings, while about one-third feel they are on track or have already achieved their financial goals, about equal to the Youngest Boomers.
• About one-third expect an inheritance from their parents, averaging $181,000, while another 21% have already received an inheritance averaging about $120,000.
• Seventy-two percent have been providing financial assistance and support to their grown children and grandchildren averaging about $38,000 over the past five years.
• Almost two-thirds of Middle Boomers like the term “Baby Boomer” to describe themselves, a somewhat smaller percentage than the Oldest Boomers and larger percentage than the Youngest Boomers’ affiliation with that generational description.

Click here for the full report.

The American Association for Long Term Care Insurance suggests the following tips that can help you significantly reduce the cost of insurance coverage.

1. Leverage Your Good Health:Insurers will require you meet certain health qualifications to obtain coverage. Discounts are provided to those in good health and 62% of applicants between ages 40-49 qualified in 2009. The percentage drops to 46% for ages 50-59 and only 38% for ages 60-69. Once obtained, the preferred health discount is not lost when your health changes. In short - the younger you buy, the healthier you are, the less expensive it will be on an annual basis.
2. Right-Size Your Coverage: Some long term care insurance is always better than none. Factor in other sources of income such as Social Security, pension and 401k plans that can pay costs and allow you to add money-saving options such as a 90-day deductible (elimination period) or consider a limited-pay plan with a Shared Care option that allows two spouses to share a common benefit pool.
3. Compare Coverage: Each insurer established it's own rates, health standards and available discounts. As a result, virtually equal protection from two highly-rated insurers can vary between 30% and 80%. Make sure your insurance professional has access to policies from more than one carrier (R&R has access to multiple long term care insurance providers).

For more questions on long term care insurance, contact our Certified Long Term Care Specialist Jane Shevey at jane.shevey@rrins.com or call her - 262-953-7123.

Question: What do Suze Orman, Oprah Winfrey and Terry Savage have in common (besides being bazillionaires)?

Answer: They each own Long-Term Care insurance.

WOW! Why would someone so wealthy own long-term care insurance? They surely could afford to self insure their care for years to come couldn’t they?

Interestingly though, the nationally recognized and widely respected advisors such as Suze Orman and Terry Savage own LTCI themselves and are ardent proponents of the product, in fact, they’ve become wealthy by giving people this very advice.

Perhaps the super-affluent own LTCI because, in addition to wealth preservation, the money collected from LTCI benefits can provide them with dignity, and options that might not be available otherwise. LTCI can give people a track to run on and a way for others to know their wishes and desires, even if they are unable to express themselves. LTCI can also reduce or eliminate much family stress and conflict.

As Suze says: "I know, I know - you think , "I'll never end up in a nursing home". Well as with all insurance policies: I hope you'll never need to use any of them, but if you do, they sure are nice to have."

For more questions on long term care insurance, contact our Certified Long Term Care Specialist Jane Shevey at jane.shevey@rrins.com or call her - 262-953-7123.

Many people still believe they will be successful at divesting their estates to their heirs so they can receive “free” skilled care. It's still possible, with a few tricky maneuvers. Advance planning can be key if it is expected that a person might need Medicaid assistance to pay for long-term care.

If you divested any financial resources within 60 months of applying for Medicaid, you may face penalties thanks to the Deficit Reduction Act. Every $100,000 divested equals nearly 16 months of ineligibility ~~ OUCH!

Deficit Reduction Act

The Deficit Reduction Act (DRA) made several important changes to the Medicaid asset-transfer rules. The look-back period for asset transfers was extended from 3 years to 5 years (60 months) and the start of the penalty period or ineligibility period for transferred assets was changed from the date of the transfer of assets to the date when the elderly person applies for Medicaid and is otherwise qualified for Medicaid, generally at the time he or she enters a nursing home. Simply put, one of the key requirements for Medicaid eligibility is that the elderly person lacks assets, meaning he or she cannot afford to pay for nursing home care. However, Medicaid will look back 5 years to see if the elderly person transferred any assets for less than fair market value, and if so, will deny Medicaid benefits for a period of time (the ineligibility period) based on the amount of assets transferred.

The DRA took effect on February 8, 2006, but, because Medicaid is a joint federal and state program, the states are required to apply the DRA to their state programs. Some states will have to change their Medicaid rules, and many of those states are not yet operating under the DRA. Therefore, be sure to find out the law in your state before making any decisions.

Look-Back Period

The look-back period is a balancing act between the government's need to be able to afford providing Medicaid and a person's desire to be able to leave their property to their heirs when they die. An elderly person cannot simply give their property away and begin receiving Medicaid. The look-back period is the time preceding the person's application for Medicaid during which asset transfers will be scrutinized. The look-back period simply means that after a certain amount of time has passed, Medicaid does not inquire whether the elderly person gave away property. However, a transfer within the look-back period will be questioned and, if something of equal value was not received in return, a penalty will be applied, which will prevent the person from receiving Medicaid long-term care benefits until that penalty period expires. The look-back period is 60 months (5 years) for transfers under the DRA. In states that have not yet implemented the DRA, it may be only 36 months for transfers (except if funds are transferred to a trust).

Ineligibility Period

The ineligibility period is a period of time during which Medicaid looks forward. The ineligibility period is triggered by transfers of assets during the look-back period and looks forward to determine a date when the person may become eligible for Medicaid. The ineligibility period begins after the elderly person applies for Medicaid and is seeking long-term care benefits. The length of the ineligibility period is calculated by dividing the total, cumulative, uncompensated value of the transferred assets by the average monthly cost to a private pay patient of nursing home care in the applicant's geographic area as of the date of the application for Medicaid. The best-case scenario is for the elderly person to transfer assets and remain healthy and out of a nursing home until the look-back period has been exceeded. That way, in the eyes of Medicaid, the person has the minimal amount assets that will allow him or her to qualify for Medicaid.

For questions on Medicaid eligibility, long-term care, look0back periods or anything regarding your plans to include some type of long-tern care within your retirement plan, please contact our Long-Term Care Specialists.

For more questions on long term care insurance, contact our Certified Long Term Care Specialist Jane Shevey at jane.shevey@rrins.com or call her - 262-953-7123.